Funding, Lack of Talent Trip Up India's AI Leadership Goal

While more AI startups are seeking funds from VC investors, they are still very small in scale

- Jas Bardia & Shouvik Das

Elusive big-ticket private funding, low research and development (R&D) investments and a shortage of engineers with specialized skills continue to threaten India's ambition to become a global leader in artificial intelligence (AI).

Last week, a report by industry body National Association of Software and Services Companies (Nasscom) said that while more and more AI startups are seeking funds from venture capital investors, they are still very small in scale. In the first six months of this calendar year, 87% of the $122 million invested by VCs in AI startups went into early-stage investments.

Indian ventures, according to the report, raised less than $16 million in late funding in the first six months of this year. In comparison, during the same period, at least 21 AI startups in the US have raised $100 million or more each to scale up development. This is in addition to AI behemoths Anthropic and OpenAI raising billion-dollar rounds. A total of $4.9 billion was raised by the American startups seeking large funds for AI training and scaling, making India's large investments insignificant, if not inconsequential.